Saturday, August 15, 2015

Redlining During the New Deal

The Home Owners' Loan Corporation (HOLC) was a government-sponsored corporation created as part of President Franklin D. Roosevelt's New Deal. Its purpose was to refinance home mortgages which were in default to prevent foreclosure.

The HOLC is often cited as starting the practice of mortgage redlining. Redlining is the process of denying services to residents of certain areas based on the racial composition of those areas. Mapping Inequality, Redlining in New Deal America allows you to view the residential security maps created by the Home Owners' Loan Corporation to indicate the level of security for real-estate investments.

The areas marked in blue on the maps are the neighborhoods which were deemed desirable for lending purposes. The yellow areas show areas deemed 'declining' areas. The red areas are the neighborhoods considered the most risky for mortgage support.

The result of the maps was that residents in the more affluent and largely white neighborhoods were far more likely to receive financing. Residents in the poorer and black communities were deemed more of a risk and so less likely to receive financial support.

Some historians argue that the HOLC themselves did not use the maps to practice redlining in its own lending activities. However it seems beyond dispute that the maps were used for years afterwards by private and public organization to deny loans to people in black communities.